The price of tin rises and does not fall, leading players in the tin industry take advantage of the trend
In 2023, the company achieved operating income of 42.359 billion yuan, a year-on-year decrease of 18.54%, mainly due to the fact that Yunnan Tin New Materials and Yunnan Tin Industry Tin Chemical were no longer included in the scope of the tin industry share consolidation in May 2023, achieving net profit of 1,408 billion yuan to mother, an increase of 4.61% over the previous year. The company's sales/management/R&D/finance expenses accounted for 0.19%, 2.45%, 0.58%, and 1.03% of revenue, respectively, with year-on-year changes of +0.01pct, +0.24pct, +0.16pct, and -0.02pct, respectively. Considering that Myanmar's Wa State has yet to resume production, Indonesia's export volume declined sharply from January to February 2023, and the year-on-year growth rate of global semiconductor sales continues to improve, we believe that under strong fundamental support, tin prices are easy to rise and fall. We raised 2024-2025 and added a profit forecast for 2026. We expect net profit to the mother of 22.11, 25.46, and 2,936 billion yuan respectively (the previous forecasts for 2024-2025 were 19.91 billion yuan and 2,386 million yuan), EPS was 1.34 and 1.55, respectively , 1.78 yuan. The current stock price corresponding to PE is 12.7, 11.0, and 9.6 times, respectively. As a leader in the tin industry, the company is expected to fully benefit from the rise in tin prices and maintain a “buy” rating.
Fine tin production is stable, and global and domestic market share continues to rise
In 2023, the company's total sales volume of tin products reached 85,600 tons, a total year-on-year decrease of 13.3%. In 2023, the company's domestic market share of fine tin reached 47.92%, up 0.14 pct year on year, and the global market share reached 22.92%, up 0.38 pct year on year, ranking first among the top ten fine tin producers in 2023, and continues to rise. On the mining side, the company's tin raw metal production reached 32,000 tons in 2023, down 7.05% year on year, and remained stable overall. Looking ahead to 2024, the company aims to produce 85,000 tons of products containing tin, which is basically the same as in 2023.
Cost is a shield, supply and demand are spears, and the price of tin rises easily and is difficult to fall
According to ITA data, the 90% quantile of the total cost of global tin ore in 2022 is 25,600 US dollars/ton, which is expected to rise to 33,800 US dollars/ton by 2027, up 32% from 2022, and is expected to rise by 54,000 US dollars/ton by 2030, an increase of 59.7% over 2027. The cost center continues to rise and drive the tin price center upward; in terms of supply and demand, the overall global tin ore supply is declining. Although there was a certain increase in the African region in 2024, production was suspended in Myanmar. Factors such as the depletion of mines in other countries are still disrupting supply. Currently, the year-on-year growth rate of global semiconductor sales continues to pick up, and the semiconductor cycle is about to recover.
Risk warning: Myanmar's progress in resuming production has exceeded expectations, domestic environmental protection policies have loosened, semiconductor demand recovery has fallen short of expectations, tin prices have fluctuated sharply, and the company's capacity utilization rate has fallen short of expectations.